Thursday, February 07, 2008

More Wall Street socialism

Howard P. Milstein is the chairman and chief executive of New York Private Bank and Trust, which owns a significant share of stock in The New York Times Company, and he uses that bully pulpit today to urge more Wall Street socialism, which can be described as having the US government nationalize the losses of private enterprises, so the owners' profits are unencumbered by such inconveniences.

Wall Street banks and finance wizzes were behind the ramp up in subprime lending, indeed without their securitization packaging and derivative spreading of the loans and the demand they created for such things to wring more and excessive fees from the process, the subprime mess would never have gotten lift off in the first place. See this and this and this and these.

Now, with the huge mark to market losses these things have morphed into after failing of their frankensteinian mark to model ideals, such losses weighing on the banks' balance sheets, this banker thinks it would be just a swell idea if the government would "guarantee" their losses, thus giving the banks the opportunity to duck their responsibilities courtesy of more corporate state funded welfare.

He says:
Until the banks rebuild their capital, they will not have the wherewithal to lend money and support economic growth. If banks of all sizes could regain their capital immediately and easily, it would be a tremendous benefit to the American economy.

The federal government could make this happen by entering into an arrangement with American banks that hold subprime mortgages....

Here’s how it would work: The government would guarantee the principal of the mortgages for 15 years.

Simply an audacious paper moon plan.

Guambat has another idea. Have all those Wall Street wizzes return all the billions of dollars in excessive wages, fees, bonuses and perks they raked in over the last 5 years. That would underwrite the wealth of the whole nation.

In either case, socialism pure and simple. Neither makes much sense. Guambat would hope for a bit more sense of self-responsibility from the boys who benefit so highly from the system.



FOLLOW-UP links:

That's what I'm talkin' about

Movement grows to nationalize US bank debt

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